- Build up an Emergency Fund
With unemployment expected to rise, and massive layoffs in many major companies recently. It makes it obvious to have money stashed away for emergencies (e.g., Losing your job, medical emergencies and so on). This is not money tied up in the stock market or in property, it is purely cash, the most liquid asset! This could be something along the lines of 3-6 months of living expenses for people currently employed full time and if you’re self-employed, 6 months for living expenses and 6 months of business expenses. This will give you that piece of mind during the period where cost of living is increasing.
- Avoid high interest borrowing
Interest rates are rising, and the cost of borrowing continues to increase. So, it’s important now to be paying down on your existing debt. Weather its car loans or credit cards, now is the time to be paying down these outstanding loans. You’ll be getting a guaranteed return on your investment; you’ll be saving on the interest that you no longer need to pay!
- Don’t realise them losses
The stock market is quite unstable and has dropped considerably since 2021 in numerous sectors. It hurts waking up and noticing the investments going from Green to Red and it’s tempting to wanting to end it all and cash out before it gets even lower.
But do not panic sell! I’ve seen smart, talented people in Finance succumb to this, when the times are tough – all logic goes out the window.
If you’re investing money that you don’t need and have a good emergency fund, it makes sense to have those diamond hands. Look at March 2020, those who sold when we had the first lockdown dip are regretting their choices. Markets came roaring back and history has shown us time and time again that after a dip and stagnant period, the market corrects itself and improves over the long run. Look at the 1979 crash, the dot com bubble, the GFC and so on, they were all overcome. It’s all about time in the market, not timing the market.
- Buy now
In conjunction with the last point, when quality stocks are discounted, you should go in and buy up. See it as a sale. I look back at some of my recent gains, and the biggest capital gains I achieved were from stocks I bought during 2020 when the world was in panic mode.
- Diversify income streams
It’s always handy to have a few side hustles that you can attain some income from. Weather its selling digital content or monetising a hobby – having fall back options and diversity in income helps when times are uncertain and can help provide you some piece of mind in the event you lose your day job.
Have you made these mistakes before? Don’t sweat it. Don’t dwell on the negative. Don’t spend too much time thinking about past mistakes, you learnt from them. He who clings to the past has no present, and compromises his future.
Inside The University of Melbourne 
